# Shipping Model Build a maritime shipping model for vessel acquisition appraisal, voyage profitability, and fleet management with TCE calculations, technical OPEX, dry-docking schedules, and asset-level debt structuring. - Canonical: https://finamodel.com/templates/shipping-model - Excel download: https://finamodel.com/templates/shipping.xlsx - Category: Infrastructure - Model type: Project finance - Difficulty: Advanced - Audiences: Founders & operators, Investors & analysts, Shipping operators, Maritime investors, Fleet managers, PE sponsors - Tags: vessel, freight-rate, fuel-cost, utilization ## Overview Model shipping company economics including vessel deployment, freight rates, bunker costs, and voyage profitability without oversimplifying rate volatility. The model builds fleet capacity from vessel composition (vessel count by type and size), calculates utilisation rates and laden TEUs (accounting for trade imbalance deadheading), and projects revenue from spot and contract freight rates. Voyage costs include bunker fuel (the most volatile input, £400-£800/tonne), port dues, canal tolls (Suez, Panama), and cargo handling. Operating expenses cover vessel crewing, maintenance, insurance, and dry-docking (every 5 years). Key mechanics: freight rates are separated into long-term contract (stable, 8-10 months ahead) and spot market (volatile, daily), allowing scenario modelling of trough vs peak cycles. Bunker costs are modelled separately with hedging dynamics. Vessel utilisation (80-90%) accounts for trade imbalances; depots time for dry-docking (off-hire revenue loss). Debt structure includes ship mortgages (60-70% LTV) and sale-leaseback financing for chartered tonnage. EBITDA margins range 15-25% in mid-cycle; can swing to 5% in trough and 40%+ in peaks. Target: shipping investors, banks financing vessel acquisitions, and operators evaluating fleet expansion. Works with scrubber installation ROI, ESG (dual-fuel vessel capex), and alliance profitability splits. ## What's included - Voyage economics with bunker consumption and port costs - Time charter equivalent (TCE) rate calculations - Daily technical OPEX including crew, insurance, and maintenance - Dry-docking and special survey capital scheduling - Ship mortgage financing with LTV and DSCR tracking - Fleet composition by vessel type and size - Utilization rates and voyage scheduling - Freight rate assumptions by trade lane and market - Bunker (fuel) cost volatility and hedging impact - Voyage economics and cost per ton economics - Operating expense and time charter costs ## How the Shipping Model Evaluates Fleet Economics and Investment Returns This shipping model is a financial framework for evaluating container line investments. It connects fleet capacity and utilisation to revenue, voyage costs, vessel opex, debt, and cash flow, then produces a discounted valuation. The model is built for analysts assessing whether a carrier's fleet, cost structure, and capital requirements justify investment or lending. Rates and financial results described here reflect illustrative model settings, not industry benchmarks. ### What drives the shipping model's operating results The model's operating engine starts with fleet capacity and utilisation. Available TEU capacity is the sum of each vessel's TEU capacity multiplied by its operating days. - Laden TEUs are then available capacity times the utilisation rate, which is capped at 95%. Ocean freight revenue equals laden TEUs times a blended freight rate per TEU. - This structure makes revenue sensitive to both how many ships are deployed and how fully they are loaded, reflecting real trade imbalances and seasonal demand. Calculation summary: ```text Ocean freight revenue = laden TEUs × a blended freight rate per TEU ``` ### The calculation flow from fleet schedule to valuation The Fleet Schedule is foundational and feeds Voyage Revenue, Voyage Costs, Capex, and Debt. - Debt drawdowns equal vessel purchase price times loan-to-value. - The model then builds the Income Statement, Balance Sheet, and Cash Flow, with interest based on beginning-of-period balances to avoid circularity. - Free cash flow is calculated as EBIT times one minus tax, plus depreciation and amortisation, minus capital expenditure and changes in net working capital, discounted at WACC with a Gordon-growth terminal value to produce enterprise and equity value. ### Revenue and cost relationships captured in the model Revenue includes ocean freight, surcharges, demurrage and detention, and slot-exchange income. Surcharges follow bunker fuel and currency inputs. - Costs are split into voyage expenses and vessel operating costs. Bunker cost equals vessels times days at sea times daily consumption times bunker price. - Cargo handling is laden TEUs times stevedoring cost per TEU. Vessel opex covers crewing, insurance, maintenance, and stores. The model also accounts for charter hire, container leasing, EU ETS, and SG&A. Calculation summary: ```text Bunker cost = vessels × days at sea × daily consumption × bunker price ``` ### How the model supports practical investment appraisal The model includes IFRS 16 lease schedules for chartered vessels, debt schedules for ship mortgages, and a valuation sheet that bridges enterprise value to equity value. - Unit economics provide a per-TEU cost waterfall and contribution margin. - Validation checks cover balance sheet integrity, utilisation caps, LTV limits, cash floors, and covenant ratios like ICR and DSCR. - Together these features let an analyst test how fleet composition, freight rates, and financing structure affect equity returns and credit metrics. ## Built for maritime investment decisions Use this model when you need to evaluate vessel acquisitions, compare voyage versus time charter economics, or plan fleet capital allocation. ## Structured around shipping-specific economics A useful shipping model needs TCE analysis, bunker cost logic, and dry-docking schedules that reflect how vessel profitability is actually measured in the maritime industry. ## Better for fleet operations and financing This gives you a purpose-built framework for maritime assets instead of adapting a generic operating model that does not account for voyage-level economics or vessel lifecycle costs. ## Built for maritime investment decisions Use this model when you need to evaluate vessel acquisitions, compare voyage versus time charter economics, or plan fleet capital allocation. ## Structured around shipping-specific economics A useful shipping model needs TCE analysis, bunker cost logic, and dry-docking schedules that reflect how vessel profitability is actually measured in the maritime industry. ## Better for fleet operations and financing This gives you a purpose-built framework for maritime assets instead of adapting a generic operating model that does not account for voyage-level economics or vessel lifecycle costs. ## Features - **Voyage economics:** Model each major trade lane separately with distinct freight rates, fuel consumption, and port costs to capture margin variation. - **Utilization and fleet deployment:** Forecast vessel deployment and ballast positioning to optimize cargo mix and minimize empty legs. - **Fuel cost exposure and hedging:** Model bunker costs as a major variable expense; show impact of hedging on earnings volatility and operating margin. ## Use cases - **Vessel acquisition and fleet renewal:** Evaluate newbuild ordering vs. S&P (secondhand) acquisitions by comparing capex, fuel efficiency, and slot productivity. - **Rate and margin forecasting:** Model earnings sensitivity to freight rate cycles, bunker prices, and utilization to guide hedging and strategic decisions. - **Investor and stakeholder reporting:** Present voyage earnings, earnings per day (EPD), and TCE (time-charter equivalent) to show operational and financial health. ## Frequently asked questions ### What is a shipping financial model? It is a model used to evaluate vessel-level profitability, fleet operations, and maritime investment returns by forecasting voyage revenue, operating costs, and financing. ### What should a shipping model include? It should include voyage economics, TCE calculations, bunker costs, technical OPEX, dry-docking schedules, and ship mortgage financing with covenant tracking. ### Who uses shipping models? Ship owners, maritime analysts, investment bankers, fleet managers, and maritime lenders use them for vessel acquisition, operational budgeting, and financing. ### What is the time charter equivalent (TCE) rate? TCE is the standard measure of vessel earnings per day, calculated by subtracting voyage costs from gross revenue and dividing by the number of operating days. ### How are dry-docking costs handled? Dry-docking costs are scheduled based on survey cycles and can be capitalised and amortised or expensed directly, depending on the accounting approach selected. ## Related templates - [Port Authority and Terminal Model](https://finamodel.com/templates/port-model) - [LNG Terminal Model](https://finamodel.com/templates/lng-terminal-model) - [Commodities Trading Model](https://finamodel.com/templates/commodities-trading-model)